Why This Spirit AeroSystems Analyst Is Turning Bearish

Spirit AeroSystems Holdings, Inc. SPR has greater risk to free cash flow generation due to “past execution missteps,” according to Morgan Stanley.

The Spirit AeroSystems Analyst: Kristine Liwag downgraded Spirit AeroSystems from Overweight to Underweight while lowering the price target from $51 to $35.

The Spirit AeroSystems Takeaways: There is heightened execution risks as the company ramps production of 737 MAX and 787 aircraft, Liwag said in the downgrade note.

The bearish view on Spirit AeroSystems stems from “a lower margin trajectory for the 737 MAX program for the company,” higher 787 production and the impact on free cash flows from forward losses on the 787, A350, and A320 programs and 787 customer advance repayments, the analyst said. 

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“We lower our margin trajectory on the 737 MAX to factor in conservatism given recent execution issues by the company,” she said. 

SPR Price Action: Shares of Spirit AeroSystems were trading down 0.71% at $29.44 Thursday morning.